11 Commonplace Market Views: True or Myth?

"Cash on the sidelines is bullish for stocks." Have you ever heard some stock
market pundit utter these words? Have you ever wondered if the statement were
true? Read this item from the latest issue of The Elliott Wave Financial
Forecast, and you'll wonder no more:

Myth -- Cash on the sidelines is bullish for stocks. This refrain
rang like a gong all the way through the declines of 2000-2002 and 2007-2009.
In February 2000, when mutual fund cash hit 4.2% (compared to 3.8% in November), The
Elliott Wave Financial Forecast issued its "cash is king" advice. Once
again, the word on the street is that there is way too much "cash on the
sidelines" for stocks to fall precipitously. This chart shows net cash available
to investors plotted beneath the DJIA. In December 2007, available net cash
expanded to a new high, besting all extremes since at least 1992, a 15-year
time span. Despite the presence of this mountain of cash, the DJIA lost more
than half its entire value over the next 15 months. Indeed, as the chart
shows, cash remained high right as the stock market entered the most intense
part of the crash in 2008. Available cash does correlate with the market's
moves, but the market is in charge, not the cash.
--The Elliott Wave Financial Forecast, Jan. 29, 2010

Now take a look at these 10 statements and decide if they are true:

Earnings drive stock prices.

Small stocks are the place to be.

Worry about inflation rather than deflation.

It's enough to simply beat the market.

To do well investing, you have to diversify.

The FDIC can protect depositors.

It's bullish when the market ignores bad news.

Bubbles can unwind slowly.

People can make money speculating.

News and events drive the markets.

Bob Prechter and our other analysts have debunked each of these statements
as a market myth. You can discover how we exposed these ideas as myths, and
in turn make more informed decisions about your investing.

We've gathered the writings that expose these 10 statements as market myths
in our 33-page eBook, called Market Myths Exposed. They come from two
of our premier publications, The Elliott Wave Theorist and The Elliott
Wave Financial Forecast, as well as two of our books, Prechter's Perspective and The
Wave Principle of Human Social Behavior.

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Market Myths Exposed for FREE
The 33-page eBook takes the 10 most dangerous investment myths head on and
exposes the truth about each in a way every investor can understand. You will
uncover important myths about diversifying your portfolio, the safety of your
bank deposits, earnings reports, investment bubbles, inflation and deflation,
small stocks, speculation, and more! Protect your financial future and change
the way you view your investments forever! Learn
more, and get your free eBook here.